Finance Glossary
Duration (Average life)
What is duration?
The duration of a bond or a bond portfolio, expressed in number of years, corresponds to the weighted average present value of all cash flows (interest and principal).
All other things being equal, the higher the duration, the greater the risk. In order to know the risk level of a portfolio made up of bonds, it is useful to know the duration of each bond to determine the average duration of the portfolio.